Gst on free samples and import of services
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 July 2017
What is the impact of GST on goods given away as free samples ? Whether GST is payable on it.
What is the impact of GST on Import of Services from abroad like Advertisement Expenses, Trade Fair, Foreign Agent Commission, Exhibition, etc.
What is the impact of GST on Import of Services from abroad like Advertisement Expenses, Trade Fair, Foreign Agent Commission, Exhibition, etc.
13 July 2017
Free Samples Promotional Items under GST with examples https://www.caclubindia.com/articles/details.asp?mod_id=30440
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 July 2017
Impact of GST on Import of Services
27 July 2024
The impact of GST on the import of services such as advertisement expenses, trade fairs, foreign agent commissions, and exhibitions from abroad involves specific GST rules and procedures. Here’s a detailed breakdown of how GST affects these types of imported services:
### 1. **General Impact of GST on Import of Services**
**Taxable Event:**
- Import of services into India is considered a taxable event under GST. Services provided by a foreign supplier to a recipient in India are subject to Integrated Goods and Services Tax (IGST).
**IGST Rate:**
- The rate of IGST on imported services is generally 18%, but it can vary based on the nature of the service. The applicable IGST rate should align with the rate prescribed for similar services domestically.
**Reverse Charge Mechanism (RCM):**
- Under the reverse charge mechanism, the recipient of the service in India is responsible for paying the IGST. The foreign supplier does not charge GST; instead, the Indian recipient must pay the tax directly to the government.
**Input Tax Credit (ITC):**
- The recipient can claim Input Tax Credit (ITC) on the IGST paid for imported services if these services are used in the course or furtherance of their business. This credit can be used to offset output GST liabilities.
### 2. **Specific Services and Their GST Implications**
**a. Advertisement Expenses:**
- **GST Impact:** When you import advertisement services from abroad, such as digital or print advertising, IGST is applicable.
- **Example:** If you pay a foreign advertising agency for online ads, you need to pay IGST on the invoice amount.
- **ITC:** You can claim ITC on the IGST paid if the advertisement is for business promotion.
**b. Trade Fair:**
- **GST Impact:** Importing services related to trade fairs, such as organizing, consulting, or participation fees paid to foreign organizers, is subject to IGST.
- **Example:** If you pay a foreign organizer for space and services at an international trade fair, IGST is applicable.
- **ITC:** You can claim ITC if the services are used for business purposes.
**c. Foreign Agent Commission:**
- **GST Impact:** Commissions paid to foreign agents or intermediaries for services related to sales, marketing, or other business activities are subject to IGST.
- **Example:** If you pay commission to a foreign agent for securing sales, IGST needs to be paid on this commission.
- **ITC:** The IGST paid on such commissions can be claimed as ITC if it relates to taxable supplies made by you.
**d. Exhibition:**
- **GST Impact:** If you import services related to exhibitions, such as setting up a booth or consulting services from abroad, these are subject to IGST.
- **Example:** If you engage a foreign company for setting up an exhibition booth, IGST is applicable.
- **ITC:** You can claim ITC on the IGST paid if the exhibition is for promoting your business.
### 3. **Procedure for Payment and Claiming ITC**
**1. **Payment of IGST:**
- **Invoice Details:** Ensure you have the correct invoice from the foreign supplier, including the details necessary for GST payment.
- **GST Portal:** Pay IGST through the GST portal. The payment is made under the reverse charge mechanism.
- **Challan/Receipt:** Obtain and retain the payment receipt or challan for IGST.
**2. **Filing Returns:**
- **GSTR-1:** Report the details of the imported services in GSTR-1.
- **GSTR-3B:** Declare the IGST paid on imported services and claim ITC in GSTR-3B.
### 4. **Example Calculation**
**Example Scenario:**
- **Service:** Foreign consultancy for trade fair organization.
- **Service Fee:** $10K
- **IGST Rate:** 18%
- **IGST Amount:** $10K × 18% = $1,800
- **Total Payment:** $10K + $1,800 = $11,800
**Accounting Entries:**
- **Debit**: Trade Fair Expense $10K
- **Debit**: GST Output Liability $1,800
- **Credit**: Bank/Cash $11,800
### Summary
1. **GST Rate:** Typically 18% IGST for imported services.
2. **RCM:** The recipient in India is liable to pay IGST under RCM.
3. **ITC:** Can be claimed on IGST if the services are used in business.
4. **Payment Procedure:** IGST should be paid through the GST portal, and proper documentation should be maintained.
**Consultation:** For specific scenarios or complex cases, consulting a GST professional or tax advisor is advisable to ensure compliance and accurate handling of GST obligations.
### 1. **General Impact of GST on Import of Services**
**Taxable Event:**
- Import of services into India is considered a taxable event under GST. Services provided by a foreign supplier to a recipient in India are subject to Integrated Goods and Services Tax (IGST).
**IGST Rate:**
- The rate of IGST on imported services is generally 18%, but it can vary based on the nature of the service. The applicable IGST rate should align with the rate prescribed for similar services domestically.
**Reverse Charge Mechanism (RCM):**
- Under the reverse charge mechanism, the recipient of the service in India is responsible for paying the IGST. The foreign supplier does not charge GST; instead, the Indian recipient must pay the tax directly to the government.
**Input Tax Credit (ITC):**
- The recipient can claim Input Tax Credit (ITC) on the IGST paid for imported services if these services are used in the course or furtherance of their business. This credit can be used to offset output GST liabilities.
### 2. **Specific Services and Their GST Implications**
**a. Advertisement Expenses:**
- **GST Impact:** When you import advertisement services from abroad, such as digital or print advertising, IGST is applicable.
- **Example:** If you pay a foreign advertising agency for online ads, you need to pay IGST on the invoice amount.
- **ITC:** You can claim ITC on the IGST paid if the advertisement is for business promotion.
**b. Trade Fair:**
- **GST Impact:** Importing services related to trade fairs, such as organizing, consulting, or participation fees paid to foreign organizers, is subject to IGST.
- **Example:** If you pay a foreign organizer for space and services at an international trade fair, IGST is applicable.
- **ITC:** You can claim ITC if the services are used for business purposes.
**c. Foreign Agent Commission:**
- **GST Impact:** Commissions paid to foreign agents or intermediaries for services related to sales, marketing, or other business activities are subject to IGST.
- **Example:** If you pay commission to a foreign agent for securing sales, IGST needs to be paid on this commission.
- **ITC:** The IGST paid on such commissions can be claimed as ITC if it relates to taxable supplies made by you.
**d. Exhibition:**
- **GST Impact:** If you import services related to exhibitions, such as setting up a booth or consulting services from abroad, these are subject to IGST.
- **Example:** If you engage a foreign company for setting up an exhibition booth, IGST is applicable.
- **ITC:** You can claim ITC on the IGST paid if the exhibition is for promoting your business.
### 3. **Procedure for Payment and Claiming ITC**
**1. **Payment of IGST:**
- **Invoice Details:** Ensure you have the correct invoice from the foreign supplier, including the details necessary for GST payment.
- **GST Portal:** Pay IGST through the GST portal. The payment is made under the reverse charge mechanism.
- **Challan/Receipt:** Obtain and retain the payment receipt or challan for IGST.
**2. **Filing Returns:**
- **GSTR-1:** Report the details of the imported services in GSTR-1.
- **GSTR-3B:** Declare the IGST paid on imported services and claim ITC in GSTR-3B.
### 4. **Example Calculation**
**Example Scenario:**
- **Service:** Foreign consultancy for trade fair organization.
- **Service Fee:** $10K
- **IGST Rate:** 18%
- **IGST Amount:** $10K × 18% = $1,800
- **Total Payment:** $10K + $1,800 = $11,800
**Accounting Entries:**
- **Debit**: Trade Fair Expense $10K
- **Debit**: GST Output Liability $1,800
- **Credit**: Bank/Cash $11,800
### Summary
1. **GST Rate:** Typically 18% IGST for imported services.
2. **RCM:** The recipient in India is liable to pay IGST under RCM.
3. **ITC:** Can be claimed on IGST if the services are used in business.
4. **Payment Procedure:** IGST should be paid through the GST portal, and proper documentation should be maintained.
**Consultation:** For specific scenarios or complex cases, consulting a GST professional or tax advisor is advisable to ensure compliance and accurate handling of GST obligations.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Regarding Appointment of auditor in case of casual vacancy
- GST- DRC 03 RCM Liability
- Validity of form 15 G and 15 H on Interest on fixed deposit
- Conversion of Proprietorship Firm to Partnership Firm
- Updated return filing
- Query on managerial remuneration u/s 197 of CA 2013
- Supply to unit situated in SEZ
- Temporary GST registration
- TDS AFTER SUBMISSION OF 15G OR H
- Mismatch of Sales Invoice in GSTR-1
- GSTR 1- Amend Credit Note
- Audit of F and O T/O
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
CAclubindia
